GigaMedia Announces Third-Quarter 2015 Financial Results

TAIPEI, Taiwan, Nov. 4, 2015 /PRNewswire/ -- GigaMedia Limited (NASDAQ: GIGM) today announced its third-quarter 2015 unaudited financial results.

Message from Management

For the third quarter of 2015, the sales revenues were $2.0 million. The contribution made by the mobile games, the social casino games and the cloud computing business accounted for about 52.4%, 30.4% and 17.2% respectively.

In the third quarter, the Company streamlined the mobile gaming business. The Company reviewed all the existing games, halted the ones with weak monetization and repackaged the ones considered better monetization for re-launch. It is expected to see its margin improve by the end of this year.

In addition to the social casino games platform, it has started to hold the online qualifying tournaments of the World Series of Mahjong 2015. It is also a good opportunity to testify the quality and loading capacity of this in-house developed platform.

With regard to cloud computing business, for the nine months of 2015 compared with the same period of 2014, the business grew by approximately 128% and the gross loss narrowed. For the third quarter of 2015 compared with the previous quarter, although the business went down, the Company believes that the cloud computing business will outperform its last year performance.

Last but not least, due to the recent slowdown of global economy and stock market, management decided to terminate the acquisition of Strawberry Cosmetics. In consequence of the termination of the acquisition, the Company had to pay $2.0 million consideration to Strawberry Cosmetics as stated in the announcement dated October 7^th, 2015 and the $2.0 million payment will impact its 4Q 2015 financial results.

Before the market rebounds, management will remain conservative in investment. At the present stage, management will make more effort to streamline the current operations, continue to maintain a healthy financial structure and meanwhile, look for other potential investment opportunities in Asia.

Consolidated Financial Results

GigaMedia Limited is a diversified provider of online games and cloud computing services. GigaMedia's online games business FunTown develops and operates a suite of games in Taiwan and Hong Kong, with focus on browser/mobile games and social casino games. GigaMedia's cloud computing business GigaCloud was launched in early April 2013 and is focused on providing small and medium-sized enterprises in Greater China with critical communications services and IT solutions that increase flexibility, efficiency and competitiveness.

Unaudited consolidated results of GigaMedia are summarized in the table below.

^(A)        EBITDA (earnings before interest, taxes, depreciation, and amortization) is provided as a supplement to results provided in accordance with U.S. generally accepted accounting principles ("GAAP"). (See, "Use of Non-GAAP Measures," for more details.) 

Financial Highlights

9M2015

• Operating revenues reached to $7.9 million, a 10.9% increase compared with the same period of 2014 attributable to the growth of cloud computing business.
• Operating expenses increased resulting from an increase of selling and marketing expenses for more mobile games launched, particularly in the first half of 2015.
• Net income was $6.3 million primarily due to the capital gain on disposal of marketable securities.

3Q2015

• Consolidated revenues were $ 2.0 million, dropped by 26.5% quarter-on-quarter and 18.9% quarter-over-quarter respectively mainly due to a decline of the overall business.
• Gross profit reported a loss of $0.6 million primarily resulting from the expenses associated with licensing fees and outsource.
• Consolidated operating expenses were $4.6 million in 3Q15, up by 15.0% quarter-on-quarter and 21.0% quarter-over-quarter mainly due to an increase on general and administrative expenses, including the expenses related to Strawberry Cosmetics Acquisition Proposal.
• Consolidated non-operating income was $5.0 million, slightly decreased by 2.8% due to investment loss recognized under equity method and foreign exchange loss.
• Net loss was $0.3 million mainly due to a reduction of operating revenues and an increase of operating expenses.
• Cash and cash equivalents in 3Q15 accounted for $74.8 million, increased by 9.5% from $68.3 million in 2Q15 resulting from a disposal of marketable securities-noncurrent.

Financial Position

GigaMedia maintained its solid financial position with cash and cash equivalents, marketable securities-current and restricted cash accounted for $75.8 million as of September 30, 2015, or approximately $1.37 per share. In consideration of short-term borrowings, its net cash was estimated at $70.0 million as of September 30, 2015, or approximately $1.27 per share.

Business Outlook

The following forward-looking statements reflect GigaMedia's expectations as of November 4, 2015. Given potential changes in economic conditions and consumer spending, the evolving nature of online games, and various other risk factors, including those discussed in the Company's 2014 Annual Report on Form 20-F filed with the U.S. Securities and Exchange Commission as referenced below, actual results may differ materially.

The mobile gaming business has been underperforming. In the third quarter, we continued to work on the integration of the resources of our gaming business in Taiwan and Hong Kong in order to streamline the operations. We hope to see significant effect on the cost reduction and margin improvement in the next two quarters. Besides, the Company published a new popular game "Yume100" from Japan targeting teenage girls and young single women who really indulge into fanfiction and this game has high monetization in Japan. We expect it to have the same performance in Taiwan and Hong Kong markets by bringing stable revenues and creating margin. This game has been launched for about one month in Taiwan and Hong Kong and received a huge response from the players; moreover, achieved to break even upon the launch on the market.

In addition to social casino game platform, for the next quarter it will continue to hold the online qualifying tournaments for World Series of Mahjong 2015 until the land-based finals in Macau.

As for cloud computing business, the Company launched a new platform "Tesseratic" (http://www.tesseratic.com/index.php/en/) for the container cluster management on OpenStack, which is an integration solution with high availability, low cost on building and good scalability. The Company will increase its marketing events in order to have widespread promotion for this new platform on the market.

Use of Non-GAAP Measures

To supplement GigaMedia's consolidated financial statements presented in accordance with US GAAP, the company uses the following measure defined as non-GAAP by the SEC: EBITDA. Management believes that EBITDA (earnings before interest, taxes, depreciation, and amortization) is a useful supplemental measure of performance because it excludes certain non-cash items such as depreciation and amortization and that EBITDA is a measure of performance used by some investors, equity analysts and others to make informed investment decisions. EBITDA is not a recognized earnings measure under GAAP and does not have a standardized meaning. Non-GAAP measures such as EBITDA should be considered in addition to results prepared in accordance with GAAP, but should not be considered a substitute for, or superior to, other financial measures prepared in accordance with GAAP. A limitation of using EBITDA is that it does not include all items that impact the company's net income for the period. Reconciliations to the GAAP equivalents of the non-GAAP financial measures are provided on the attached unaudited financial statements.

About the Numbers in This Release

Quarterly results

All quarterly results referred to in the text, tables and attachments to this release are unaudited. The financial statements from which the financial results reported in this press release are derived have been prepared in accordance with U.S. GAAP, unless otherwise noted as "non-GAAP," and are presented in U.S. dollars.

Webcast Schedule

For Q&A regarding the third quarter 2015 performance upon the release, investors may send the questions via email to [email protected] by November 10, and the responses will be replied in the webcast. Webcast will be available on the company's official website www.gigamedia.com on November 20.

About GigaMedia

Headquartered in Taipei, Taiwan, GigaMedia Limited (Singapore registration number: 199905474H) is a diversified provider of online games and cloud computing services. GigaMedia's online games business develops and operates a suite of games in Taiwan and Hong Kong, with focus on browser/mobile games and social casino games. The company's cloud computing business is focused on providing SMEs in Greater China with critical communications services and IT solutions that increase flexibility, efficiency and competitiveness. More information on GigaMedia can be obtained from www.gigamedia.com.

The statements included above and elsewhere in this press release that are not historical in nature are "forward-looking statements" within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include statements regarding expected financial performance (as described without limitation in the "Business Outlook" section and in quotations from management in this press release) and GigaMedia's strategic and operational plans. These statements are based on management's current expectations and are subject to risks and uncertainties and changes in circumstances. There are important factors that could cause actual results to differ materially from those anticipated in the forward looking statements, including but not limited to, our ability to license, develop or acquire additional online games that are appealing to users, our ability to retain existing online game players and attract new players, and our ability to launch online games in a timely manner and pursuant to our anticipated schedule. Further information on risks or other factors that could cause results to differ is detailed in GigaMedia's Annual Report on Form 20-F filed in April 2013 and its other filings with the United States Securities and Exchange Commission.

For further information contact:
Amanda Chang
Investor Relations Department
Tel: +886-2-2656-8080
[email protected]

(Tables to follow)

SOURCE GigaMedia Limited